U.S. stock futures experienced a decline as traders evaluated a preliminary U.S.-China trade agreement alongside new inflation data. The S&P 500 futures fell by 0.2%, mirroring the downward trend of the Nasdaq 100 futures. Additionally, futures linked to the Dow Jones Industrial Average dropped by 72 points, or 0.2%. These fluctuations in the market come on the heels of a report indicating that U.S. consumer prices increased less than anticipated in May.
The consumer price index (CPI) saw a modest rise of just 0.1% for the month, falling short of the Dow Jones forecast, which projected a 0.2% increase. Moreover, the core CPI, which excludes volatile food and energy prices, also registered a lower-than-expected rise. This disappointing inflation data contributed to a cautious atmosphere in the markets, as all three major benchmarks ended the previous session in the red.
Recent gains in the stock market appeared to stall as major indexes closed the session near their previous levels. In a recent post on Truth Social, former President Trump claimed that the deal with China was finalized, pending approval from himself and President Xi. He outlined that, under this deal framework, China would supply essential rare earth materials and magnets upfront, while the U.S. would permit Chinese students to enroll in American colleges and universities. Trump further emphasized that the U.S. would impose a total of 55% tariffs, while China would only bear a 10% tariff burden.
Despite the announcement, the news did not seem to invigorate stock or bond investors. Ed Yardeni, president of Yardeni Research, noted in a Thursday report that the market's reaction indicated a level of unease, particularly regarding the potential for persistent high tariffs. Additionally, Yardeni pointed out that Trump's expressed doubts about Iran's willingness to halt uranium enrichment in a nuclear deal with Washington may have further unsettled investors.
As equities retreated, analysts at ANZ emphasized that the market was coming to terms with the reality of elevated tariffs being a long-term fixture. This cautious sentiment among traders highlights a growing wariness around the U.S.-China trade relations and its implications for the broader economy.
